Tag: COMM 101 104

Inventory Ratio

Having a better inventory turnover may not be beneficial to the firm. For example, a decrease in price can achieve better inventory ratio but may not help the firm to increase marginal profit at all.

Organizational Structure

Centralization vs. Decentralization

Which one is better? It depends

How could the structure be built?

Divisional structure is based upon:

– Region

– Product

– Function (activity)

Responsibility accounting (divisions are evaluated)

Cost centers

– Assess actual cost vs. Budgeted costs

Profit centers

– Assess targeted profit vs. actual profit

– But this does not measure anything else such as investments, operations, etc.

Revenue centers

– Assess revenue target vs. actual revenue

– But costs are not included

Investment centers (return on investment)

– Profit / Investment base

– But people may be too scared to make a move

Management Information Systems/Business Technology Management is the process in which IT is used to apply into business.

IT — MIS/BTM —> Business

Why should we care?

1. What technologies should we consider?

What is missing?

1. Knowing who your users are and howthey are going to use the system?

2. Understand and providing requirements:

– How to identify them?

– How not to chagne your mind frequently?

– How to clearly explain this to developers?

– How to ensure that they are met?

3. Knowing how to adjust other parts of your business to accommodate the system

2. How do we leverage their opportunities?

If a firm does not hold on to the opportunities for its technologies, others may take advantages of them.

3. How do we minimize their risks?

What is missing?

1. Understanding and conveying requirements

2. Good project management

3. Business-IT alignment

– Ensuring your IT deliver values to your business

4. Can use IT governance to control

– Are we doing the right things?

– Are we doing them the right way?

– Are we getting the benefits?

– Are we getting them done well?

Revolutionizing Innovation

Measurement: Using IT to get data. Be careful of the quality and the validate of the data.

Experimentation: Using IT to get insights.

Sharing: Using IT to share insights

Replication: Using IT to replicate insights

What is finance?

Everyone who saves money in the bank is a investor

finance is about getting investors excess supply capital to companies or anyone whom have the demand to borrow

Investors —> Financial institution —> Companies

Types of financial institutions :

Banks

Pension fund

Mutual fund

Finance skills

Math skills to deal with uncertainties

Analytical skills to formulate problems

People skills to manage relationships with others

Communication skills

Stock allows you to gain:

Cash flow rights and ownership rights

• Demand forecasting
• acting on a forecast
• information sharing in a supply chain
• the role of distribution channels and intermediaries
• mass customization

Motivating employees at the customer service centers = better treated customers = better returns

Calls are usually stressful and emotional which might negatively cause the employees to be stressed

Costs and Benefits of outsourcing customer services (Example: Indian employees)

Importance of a positive and enjoyable working culture (environment) to reach employees loyalties

Inventory Management

Inventory turnover ration = Cost of Goods Sold / Inventory

If the ratio is 6, for example, you can calculate the annual figures, such as:

365 / 6 = 60 days on the shelve of the store

Buying Direct – Buying goods and services directly from the manufacturer 

Food and services are  usually the types of products that can be purchased directly.

Advantages of the direct business model:

1. Relationship with customer = increases demand

2. anticipate demand = Better information = Better forecast

3. Improve margins

1 + 2 = customization, provide what consumers want = it’s good because it increases demand and allow the firms to increase its price

But customization or “cutting the middle man” will move the firm from economies of scale to dis-economies of scale

Operation – The making and delivering of any goods and services

Roles of Vice President of Operations

1. Inform strategies or goals to other departments under the company

2. How to get things done

Social entrepreneur  + Social mission + Social purpose venture = social entrepreneurship

Social entrepreneur: Someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change (social purpose venture)

They are…

Ambitious

Mission Driven

Strategic

Resourceful

Results Orientated

Social Economy

Non profit

Charities

Foundations

Cooperatives

Credit unions

social enterprises

Volunteer associations

Service associations

Social enterprise v.s. Charities

Business Approach: SE’s usually make profits than put the money back to the society

Legal Structures: SE’s have more cooperative or governmental structures

External Finances: SE’s have a wide range of investment resources

Social Enterprise Summary

SE is about FINANCIAL AND SOCIAL RETURNS

SE seek to achieve SOCIETAL CHANGE using INNOVATIVE approaches

SE have both SOCIALLY and ECONOMICALLY IMPACTS

• Shareholders’ Equity = Assets – Liabilities

Asset: Item with future value

• Current/Long term assets: liquidity (how fast it can be transferred into cash)
• Intangible asset: A RIGHT!
• How do you know it exist? Because you have a document to prove that

Financial Accounting:

• Produced for EXTERNAL STAKEHOLDERS
• Focus on the HISTORIC INFORMATION
• Tabulation of FINANCIAL STATEMENTS
• Comply with GENERAL ACCEPTANCE ACCOUNTING PRINCIPLES

Key statements:

• Income statement
• Balance Sheet
• Statement of Cash Flows

Balance sheet considers:

Assets: What company OWNS

• cash, equipment, property

Liabilities: What the company OWES

• Bonds, bank loans

Equity: What the company have RETAINED EARNINGS AND SHARES

Cash Flow

Current Ratio: CA/CL

• Two areas of accounting: one for managers and one for investors

• Management accounting:
• Produce for MANAGEMENT
• Focus on the FUTURE (therefore, there may be uncertainties)
• Tabulation of REPORTS
• Comply with NO GENERAL ACCEPTANCE ACCOUNTING PRINCIPLES

• The slope of the line is the estimate of your variable cost
• The intercept is the estimate of the fixed cost
• Break-Even = Fixed Cost / Contribution
• Contribution = Selling Price – Variable Costs
• Adding target profit: (Fixed Costs + Target Profit) / Contribution

• Relevant Costing: a cost that changes between alternatives.
• Sunk costs are not relevant to decision making.